Macquarie Asset Management (MAM) is prioritising LP-led deals over GP-led deals in its first dedicated infrastructure secondaries strategy, said Wandy Hoh, the firm’s head of secondaries.

MAM, which reached final close in July for Macquarie Alliance Partners Infrastructure Fund (MAPIF) at USD 711m including separate managed accounts, prefers LP-led deals as they offer “immediate diversification by geography, sector, vintage and GP”, Hoh said.

LP-led deals are also typically “shorter duration”, Hoh said, since investors are buying into funds already several years into their term.

They also offer “early cash flows”, meaning the portfolios usually contain mature, income-generating assets.

While GP-led opportunities are not off the table, Hoh said Macquarie approaches them far more opportunistically and selectively where the GP remains aligned with investors and there is a strong business plan and path to liquidity.

A person familiar with the strategy said this refers to having a strong plan for the continuation vehicle’s assets and a credible exit route, typically through a sale.

MAPIF will invest globally to build up a portfolio across digital infrastructure, renewables, transport and power, focusing on operating assets and LP co-investment positions in the secondary market.

Infrastructure secondaries is in a “growth timeframe” with deal flow having been “heightened” by LPs seeking liquidity for portfolio management or cash flow needs.

For investors new to the asset class, Hoh said the “lack of J curve” in the case of LP-led secondary deals and the prospect of early distributions are “very appealing”.

The J curve refers to the early period in closed-end funds when returns are negative due to fees and investment costs, before assets begin generating cash flow.

Existing infrastructure investors, she added, can use secondaries “to smooth out that J curve on the overall portfolio” and achieve “a more steady type of returns curve”.

MAPIF will target core and core-plus risk profiles, including assets acquired from value-add funds once they have matured, but will avoid speculative opportunities or greenfield projects still under development.

The 11-strong MAPIF team was built in the three years prior to its launch in December 2023, during which it also deployed capital towards a seed portfolio that now forms part of the vehicle’s cornerstone investments.

Hoh said the launch followed “observing the market for quite some time” and recognising a gap for a specialist approach.

The fund has attracted capital from a diversified group of pensions, insurance companies, sovereign wealth funds and family offices across EMEA, APAC and the Americas.